Drexel inc. begins liquidation activities and adopts the liquidation basis of accounting. the book value of its assets totaled $500,000, including $5,000 in cash, and the book value of its liabilities totaled $490,000. expected proceeds from reported assets other than cash at october 1, 2020 were: receivables, $50,000; inventory, $120,000; and plant and equipment, $200,000. expected costs of liquidating assets were $20,000.
during the three months ending december 31, 2020, the company collected $15,000 in receivables, sold inventory for $50,000, and paid liquidation costs of $6,000. reported liabilities of $60,000 were paid. at december 31, 2020, estimated valuations on remaining assets, other than cash, and liabilities are as follows:
receivables, $30,000
inventory, $54,000
plant and equipment, $194,000
newly identified unreported assets can be liquidated for an estimated $4,000. expected remaining costs of liquidating assets are $15,000. a creditor holding a loan with a book value of $35,000 agrees to accept $20,000 as full payment.
required:
a. prepare a statement of changes in net assets in liquidation as of december 31, 2020.
b. prepare a statement of net assets in liquidation as of december 31, 2020.